Correlation Between Microbot Medical and Coffee Holding

Can any of the company-specific risk be diversified away by investing in both Microbot Medical and Coffee Holding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microbot Medical and Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microbot Medical and Coffee Holding Co, you can compare the effects of market volatilities on Microbot Medical and Coffee Holding and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microbot Medical with a short position of Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and Coffee Holding.

Diversification Opportunities for Microbot Medical and Coffee Holding

0.54

Correlation Coefficient

Microbot Medical  Coffee Holding

Very weak diversification

The 3 months correlation between Microbot and Coffee is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding and Microbot Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microbot Medical are associated (or correlated) with Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of Microbot Medical i.e., Microbot Medical and Coffee Holding go up and down completely randomly.

Pair Corralation between Microbot Medical and Coffee Holding

Assuming the 90 days trading horizon Microbot Medical is expected to generate 0.78 times more return on investment than Coffee Holding. However, Microbot Medical is 1.29 times less risky than Coffee Holding. It trades about 0.29 of its potential returns per unit of risk. Coffee Holding Co is currently generating about -0.08 per unit of risk. If you would invest  92.00  in Microbot Medical on October 5, 2024 and sell it today you would earn a total of  17.00  from holding Microbot Medical or generate 18.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Microbot Medical  vs.  Coffee Holding Co

Microbot Medical

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Microbot Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Coffee Holding

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Coffee Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Coffee Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microbot Medical and Coffee Holding

The main advantage of trading using opposite Microbot Medical and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical position performs unexpectedly, Coffee Holding can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Coffee Holding will offset losses from the drop in Coffee Holding's long position.

The idea behind Microbot Medical and Coffee Holding Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..